Consumer Car Finance Options and Car Leasing

Personal Contract Hire (PCH) is a form of car leasing for personal users – if you are looking for business car leasing visit our page.

With PCH you pay a monthly car lease fee to obtain a new car for a period of typically between two to four years. Legal ownership is retained by the finance company that delivers your contract car to your door. With personal contract hire, at the end of the term, you can have it replaced by another new contract car for a set monthly payment. Occasionally, the company will agree to sell you the car in return for a single lump payment if you wish to keep it.

Despite the word ‘hire’, hire purchase is similar to buying the new car outright with a secured loan and paying it back monthly. Unlike contract hire or purchase, you must pay for the entire cost of the car and you will own it once you have paid all the monthly installments and a final nominal transfer fee. Monthly payments are therefore much higher than when ‘leasing’ on a contract.

A loan for a car is either a secured (often called a car loan) or unsecured loan (often called a personal loan). A secured loan or car loan is when the finance company retains ownership of the car until you have repaid all of the money you borrowed for the car loan and is therefore similar to hire purchase. An unsecured loan is when the loan attaches to you (not the car) and you own the car from the date of purchase. If you default on a secured loan, the finance company takes the car. If you default on an unsecured loan, the finance company will pursue you directly and take legal action against you for repayment of the loan. Unsecured loans are often more expensive than car loans and will have a higher APR.